Financial crisis panel urges prosecutions of industry figures

The congressional panel examining the root causes of the nation's financial crisis voted to refer to state and federal prosecutors a wide range of potential criminal wrongdoing by financial industry figures and corporations, people involved in the deliberations said Tuesday.

WASHINGTON — The congressional panel examining the root causes of the nation's financial crisis voted to refer to state and federal prosecutors a wide range of potential criminal wrongdoing by financial industry figures and corporations, people involved in the deliberations said Tuesday.

The politically divided Financial Crisis Inquiry Commission is likely to detail the referrals on Thursday in releasing its final report, based on testimony from more than 700 people in coast-to-coast hearings and a review of millions of pages of documents.

The Huffington Post website first reported on the commission's referrals Monday evening.

It couldn't be learned which financial executives and companies were subject of the referrals to the Justice Department and state attorneys general. The panel investigated the roles of, among others, subprime mortgage brokers and lenders; Wall Street giants that bought, repackaged and resold the loans; bond ratings agencies; and a huge insurer that wrote protection on dicey bonds, enabling a U.S. housing bubble to swell until it burst, crashing the global economy.

Two people who had roles in the deliberations, speaking on condition of anonymity because the report is still confidential, said that the panel voted on a number of the Justice Department referrals months ago.

"And we've done some more," one of these individuals said.

The legislation creating the commission, signed by President Barack Obama on May 20, 2009, charged the 10-member panel to refer to the U.S. attorney general and appropriate state attorneys general "any person that the commission finds may have violated the laws of the United States in relation to (the) crisis."

"We did our duty," said one of the two involved in the process.

However, the other knowledgeable person stressed that the panel's thin investigative staff didn't attempt to compile evidence for solid criminal cases, but rather referred information that raised serious legal issues.

The panel sought to model itself after the hard-hitting Pecora Commission, the Depression-era panel that compiled evidence leading to prosecutions of high officials of some of the nation's biggest banks.

However, the Crisis Inquiry Commission's six Democrats and four Republicans split ideologically in the months after their appointment. The divisions showed up when Republicans chose to release their own findings in December, the original deadline for the final report, and blamed much of the crisis on the "national home ownership strategy" begun under President Bill Clinton and on secondary mortgage giants Fannie Mae and Freddie Mac for jumping into the subprime market.

Commission members and staff signed agreements to keep details of the final report confidential until its release.

However, the New York Times reported late Tuesday that it had obtained a copy of the 576-page report, which it said concluded that the financial disaster was "avoidable" and laid blame on a range of actors from federal regulatory failures to shoddy mortgage lending and reckless risk taking.

Commission spokesman Tucker Warren said the report will be released Thursday and declined to comment further.